2 charged in $100M Ponzi scheme

Associated Press

Published 7:14 pm, Thursday, August 1, 2013

Central Islip

A New York investment fund manager and his brother-in-law were arrested Thursday and charged with running a multimillion-dollar Ponzi scheme that siphoned investors' money in order to finance the men's interest in an eastern Long Island condominium resort.

Among the bilked investors was an unnamed volunteer fire department on Long Island, which lost $600,000, court papers said. An unidentified Maryland investor lost $11 million, according to the indictment.

Brian R. Callahan, 43, and Adam J. Manson, 41, were charged in an indictment unsealed in U.S. District Court in Central Islip with wire fraud, securities fraud and conspiracy to commit securities fraud. Callahan also faces two counts of identity theft, according to the indictment.

Attorneys for both men entered not guilty pleas at arraignments Thursday. Callahan was released on $2 million bond after his relatives put up three of their Southington, Conn., homes as collateral. Manson was released on $1 million bond; his father put up his Old Westbury home as collateral.

The two men also were ordered to surrender their passports.

Magistrate Judge A. Kathleen Tomlinson made an exception to a standard order requiring the two men to stay away from each other, saying because they were related by marriage — Callahan is married to Manson's sister — they would be permitted to attend family functions while awaiting trial. Tomlinson, however, instructed both men they were not to discuss the case outside the presence of their attorneys.

Callahan raised more than $118 million from at least 40 investors between 2006 and 2012, federal prosecutors say. Despite assuring the investors the money would be invested in mutual funds, hedge funds and other securities, Callahan "siphoned off" about $96 million, prosecutors said.